Measuring Capacity

1. Unit of Output
   - If the variety products produced at a work center or in a plant is not large, it is often possible to use a unit common to all products. The unit common to all product is time.
2. Standard Time
   - Work content of product is expressed as the time required making the product using a given method of manufacture. It provides a yardstick for measuring work content and a unit for starting capacity.
3. Levels of Capacity
   - Capacity need to be measured on at least three levels which is machine or individual worker, work center and plant can be considered as a group of different work centers.
4. Determining Capacity Available
   - Two ways of determining the capacity available measurement and calculation.
   - Measured capacity : figured from historical data.
   - Calculated: based on available time, utilization and efficiency.
5. Available Time
   - Formula:  No. of machines x No. of hours x No. of days
6. Utilization
   - Formula: (Hours actually worked/Available hours) x 100%
7. Efficiency
   - Rate formula: (Actual rate of production/Standard rate of production) x 100%
   - Hours formula: (Standard time/Actual time) x 100%
8. Rated Capacity
   - Formula:  Available time x Utilization x Efficiency
9. Demonstrated Capacity
   - Formula: Total standard time/Number of period
10. Total Standard Time
    - Formula: Set up time + (Run time x No. of units) the answer will be in standard hours.
11. Capacity Required
    - Formula: Actual time x Efficiency x Utilization